The Sovereign Ratings agency, Moody’s has downgraded two municipalities earlier this week. Moody’s downgraded The city of Ekuruleni and Nelson Mandela Metropolitan Municipality. It says that it expects the City of Ekurhuleni’s operating performance to continue being weak in the coming years. While Nelson Mandela Metropolitan Municipality has been downgraded due to significant challenges associated with its infrastructure backlog, particularly the water crisis that has escalated and a significant drop in its operational revenue.
Moody’s cautions that a rating upgrade is unlikely, but will consider stabilising the outlooks of the individual municipalities if they display robust ‘ operating performance and liquidity resilience.
While two municipalities face challenges and downgrades, the cities of Cape Town, Johannesburg and uMhlathuze has had a positive assessment, however, a negative outlook still remains. The ratings agency expects the three cities to maintain positive operating balances in the medium term, placing them in favourable positions to raise external funding.
